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1984 (7) TMI 132

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....of the ITO that the assessee had also received income from share of profit from the firm Hukam Chand Swarn Singh which he had failed to declare in his individual return. He, therefore, issued notice under section 148 of the Act dated 15-2-1977 which was served upon the assessee on 2-3-1977. While acknowledging the receipt of the notice under section 148 the assessee mentioned on the notice itself that return filed on 23-2-1977 may be treated as a compliance to this notice. It would, thus, appear that after issue of the notice under section 148 on 15-2-1977 and before its service on 2-3-1977, the assessee filed a second return of his total income on 23-2-1977 which the assessee wanted to be treated as a return in response to notice under section 148. The ITO on the basis of the above return made reassessment of the total income of the assessee including therein the share income from the firm at Rs. 26,928 as determined in the case of the firm. The ITO also initiated penalty proceedings under section 271(1)(c) and imposed penalty of Rs. 24,047 which is 100 per cent of the amount concealed. The submission before him was that the share income of the assessee in the aforesaid firm was i....

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....essee       16-10-1979 From the above data, Shri D.S. Gupta tried to establish that the original assessment in the case of the assessee was completed on 28-2-1976. Till then return of income in the case of the firm in which he was a partner was not filed by the firm. The defective, return in that case was filed on 27-9-1976 and effective return on 18-1-1977. It was, therefore, contended that the omission of share income in the return filed by the assessee on 25-9-1975 was inadvertent. He further pointed out that the effective return in the case of the firm was filed on 18-1-1977 and thereafter the assessee filed revised return on 23-2-1978 suo motu before being detected by the department. It was contended that even though the ITO had issued notice under section 148 on 15-2-1977 but it was not served upon the assessee till 2-3-1977. The supplementary return was filed voluntarily on 23-2-1977 after the firm in which the assessee was a partner had filed its return on 18-1-1977. It was, therefore, urged that the omission on the part of the assessee to include the share income in the original return filed being unintentional and its voluntary disclosure th....

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....by the assessee on 23-2-1977 was not a valid return inasmuch as it was filed after the original assessment was made on 28-2-1976 and before service of notice under section 148 on 2-3-1977. He, therefore, urged that reassessment framed by the ITO on 16-10-1979 on an invalid return is also invalid. He further contended that the assessee having already suffered taxes even though assessment made was bad in law, he cannot be made to suffer further by visiting him with penalty under section 271(1)(c). According to him, the ITO could not acquire jurisdiction to impose penalty in the course of assessment proceedings which were bad in law. He, therefore, urged that the penalty order was liable to be cancelled. 7. Shri R.K. Bali, the learned senior departmental representative, on the other hand, pointed out that the omission of share income from the firm in the return of the assessee was deliberate and not unintentional. In support of his contention he pointed out that on the supplementary return filed by the assessee on 23-2-1977 the verification has been signed on 16-2-1976, i.e., even before the completion of the first assessment on 28-2-1976. He urged that this return was available with....

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.... law. In the proposal he had proposed to levy the penalty of Rs. 26,928. Not only, this, the IAC also approved the levy of penalty at Rs. 26,928. He, therefore, urged that it was through inadvertent mistake that while imposing the penalty under section 271(1)(c) the ITO mentioned the penalty at Rs. 24,047. He, therefore, urged that this being an apparent mistake was rectifiable under section 154 of the Act and did not affect the jurisdiction of the ITO. 11. Lastly, he contended that the supplementary return filed by the assessee on 23-2-1977, read with his endorsement on the notice under section 148 received by him on 2-3-1977 that the return filed on 23-2-1977 may be treated as a return in response to notice under section 148 was a valid return. He also pointed out that the assessee has filed a letter addressed to the ITO in response to notice under section 148 wherein in paragraph 4 he has mentioned as under : "1. That the notice under section 148 was received by me on 2-3-1977. 2. That I filed revised return on 23-2-1977 declaring my share from Hukam Chand Swarn Singh, Nangal. 3. 4. That the return filed may kindly be considered as voluntary and may also be treated as compl....

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....gh Court in the case of Smt. Dayawanti and also of the Madhya Pradesh High Court in the case of Jamnalal Ramlal Kimtee, wherein the decision of the Hon'ble Supreme Court in Brij Mohan's case has also been considered. We have, no doubt, in our mind that the provisions relating to the machinery for imposing penalties are procedural in nature and, therefore, have retrospective effect. We, therefore, do not find any merit in this contention of the assessee as well. 15. With regard to the second issue raised by the learned counsel for the assessee that the ITO did not frame any specific charge, we may point out that a reference to the assessment order passed by the ITO reveals that he initiated penalty proceedings under section 271(1)(c). Section 271(1)(c) consists of two limbs : (i) concealing the particulars of income, or (ii) furnishing inaccurate particulars of such income. In the show-cause notice issued by the ITO under section 274(2), the ITO has mentioned both, i.e., concealment of particulars of income or furnishing of inaccurate particulars of income. This is a standardised printed notice by the department. The ITO did not strike out the inapplicable alternative. The learned ....

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....on of the other. The two charges can and very often subsist together. Even in the ratio of the above decision of the Hon'ble Calcutta High Court we do not find any merit in the contentions made on behalf of the assessee. 17. The last objection of Shri Gupta is that the supplementary return filed on 23-2-1977 on the basis of which reassessment has been made on 16-10-1979 was invalid and, therefore, no penalty could be initiated and imposed on the basis of an invalid order. The submission of Shri Gupta was that even though the assessee had informed the ITO through endorsement on the notice under section 148 itself and the subsequent letter that the return filed on 23-2-1977 may be treated as a return in compliance with notice under section 148 but did not make the return as valid. He submitted that the assessee even by consent could not confer jurisdiction on the ITO. He pointed out that on every return of income a verification is to be made which is to be signed by the assessee. This verification has to be made on the date when the return has been signed. The date of verification of the return continues to be 16-2-1976 and, therefore, this was not a valid return. On the other hand,....